Zeraim Gedera hosted a conference, "Fresh Produce Marketing in a Changing Economic Environment", on the sidelines of the Agritech 2009 exhibition in Tel Aviv on May 7th.

The conference included a lecture by Mr. John Giles, Divisional Director at Promar International. He enriched the listeners with the European perspective. Mr. Jess Ennis, Director of Productores de Hortalizas magazine, spoke on consumption trends in the US. And Professor Oren Kaplan addressed the issues of marketing and consumer behaviour.

"We need 50% more food to feed the world and [we need to] use 30% less energy to do this," commented Giles in a spectacular lecture that opened the interesting seminar. Elaborating on the challenges of food production, adding that we need to use 50% less water, he said that consumers waste 40% of food produced.

"The good news", said Giles "is that the EU imports large volumes of fruit and vegetables." But the bad news, according to Giles, mainly for non-members of the EU, is that the imports are preferably from EU growers. Given these figures, it was newsworthy hearing that, at the same time, the EU's 490 million (relatively affluent) consumers - the largest single bloc in the world, highly concentrated and by no means uniform in any respect - accounts for almost 50% of Israeli food exports.

According to Giles, growers and retailers around the world should put more effort into the emerging trade zones, the Americas, the Afro-Europe zone and Asia.  He also added that the World Trade Organization predicts a 10% decline in the demand for imported fruits and vegetables, that competition from other countries will increase, that food processing from India and China will be the threat of tomorrow, and that India specifically will be a significant player in the future market for the export of fresh produce.

2009 found the EU consumer concerned with a variety of issues, such as fair-trade practices that guarantee a better deal for Third World producers, the rainforest alliance, working with the Carbon Trust, etc.

John Giles called for maintaining investment in R&D and brands. Retailers, according to the Promar director, should expect quality and availability, innovation, year-round supply, GAP and provenance of produce, training and staff development, exclusivity, environmental benefits, market and consumer research, advice and safety. Growers and exporters must know, according to Giles that certificates like those of GlobalGap, Soil Association organic standard, and the British Retail Consortium have become facts of life.

The world economic recession generated great interest, as well, during the ZG seminar. 

"The impacts of the recession," said Giles, "are fall out from the supply chain, consumers are nervous, and good value for money becomes essential. There will be some winners too. [When] volatility becomes the norm, cash is tight and debt is bad, you need good partners. Now more than ever, retain your best people, [make] better use of risk management tools and control costs, as the niches are under pressure."

In the future, according to Giles, the competition will be mainly between retail chains more than between countries. Therefore, it is very important to export to the strong and competitive chain stores, more than to a specific country. Moreover, the "non-discount" chains have changed their strategy to opening discount stores as well, in order to compete with the German discounters and, consequently, strengthen the competition of the chain stores in the EU market.

"Spilling over from ethnic communities (especially Latin and Asian ones), we’re consuming more exotic and tropical fruits and vegetables. Also, the key word is 'convenience'; even at home we want good and fast food - “Grab-n-Go.” 

One of consequences of the Salmonella outbreak that struck North America last year is the importance the American consumer places on the focus on health, safety and traceability. "We are turning green," said Ennis, "with a growing demand for organics."

The economic recession, deeply felt in the US, has made Americans more concerned about prices in supermarkets. "More Americans grow their own," Jess indicated, giving the Obama family as an example.

"This is the time to introduce new products and brands"

"Services that companies will offer at this time of crisis, which will become the added value for the consumer, are the key to maintaining stability during this period," according to advice offered by Professor Oren Kaplan to the attendees present in the hall.  "As there are more constraints, we will need to be more creative.  Remember that during a crisis, the consumer will be more open to new habits of consumption, if it is in the form of services, lower prices, etc.  In such periods as these, when constraints increase, creativity will also increase, and so," he explained, "this is the time to introduce new products and brands."

At the same time, Kaplan believes, it is important to understand that at a time of economic crisis, the consumer's approach changes and he invests more thought in his purchases, which become less impulsive and more rational. A slump in demand comes from intelligent purchasing. The consumer buys what he needs according to thoughtful calculation.

When asked about price levels during a recession, Kaplan replied that a drop in price can sometimes create a psychological difficulty. Consumers, he said, quickly get used to the lower prices, but the return the original prices may make them suspicious of the retailer.

Like Giles, Prof. Kaplan noted that it is important to brand products that in the past were not branded, because one of the functions of branding is to sell the consumer a fantasy, and fantasy increases demand. The thinking has to change from one of products to one of brands. Kaplan advised his listeners to distinguish their brand from other products on the shelf; that is, the branding need not be of the product, but of the producer. It is important to understand that the promise behind the branding must be authentic, as today's consumers are sophisticated, and even more so during an economic crisis, with access to many sources of information. Untrustworthy information will harm the brand over time.

Food market chain stores have been seeing a steep increase in recent years in the use of private labels, "which is lowering costs to the consumer by an average of 15%," Prof. Kaplan said.

When asked about future methods to grapple with the economic situation, Kaplan advised to try and understand current market trends, such as organic foods and the like. Novelty, he said, is not due to the producer understand what the consumer wants, because the consumer does not necessarily know what he wants. Similarly, creative thinking must also be expressed in collaboration - what is difficult to accomplish as an individual organization may be possible through a joint business venture. Such partnerships can even be formed with competitors - using common service platforms and competing for the consumer. 

Doron Ovitz, a pepper grower and exporter from the Amioz community, who attended the seminar, said that the lectures, as well as the opportunity to raise burning issues, allowed him to get a bit wider picture of the market crisis and to discover new marketing horizons.